The Amagansett Farmers Market in the Hamptons has been sold and will be run by Eli Zabar, the youngest of the Zabar brothers, who is not connected to the Upper West Side market. The 10-acre Amagansett Farmers Market has been a staple on Long Island for more than half a century. The town of East Hampton bought 7.56 acres of farmland behind the market, and public land advocate Margaret de Cuevas bought the market for $5.5 million and will turn over the rights to the Peconic Land Trust. On Manhattan’s Upper East Side, Zabar owns Eli’s Manhattan, the Vinegar Factory and E.A.T.

A six-bedroom spec home on 1.5 acres at 493 Parsonage Lane in Sagaponack is still on the market, but builder Joe Farrell said he rented it for $600,000 for the summer.

By Julia Dahl

Speculative building is a risky endeavor almost anywhere. From the initial land purchase to the process of obtaining permits, hiring an architect and overseeing construction, building a home before you have a buyer is not for the faint of heart. In tony spots, like the East End of Long Island, where the price of land has gone up seven-fold in the past 10 years, it can be an even bigger risk.

And a year after the subprime mortgage crisis, it can be downright dangerous.

“I can’t imagine why anyone would go into speculative building right now,” said Walter Molony of the National Association of Realtors.

Nationwide, building is down. Though spec building isn’t broken out from the stats, new housing starts dipped 27 percent from 2007, which was itself a drop of 24 percent from 2006.

However, Michael Davis, a longtime developer of high-end properties in the Hamptons, argued that, “the Hamptons is unique.” Davis, who has already sold one spec home in Southampton this year for $5.9 million, has two others in the works. “If you’re in the right location in the Hamptons,” he said, “demand exceeds supply, even now.”

Still, market watchers are aware that even the Hamptons have not been completely immune to the fluctuations of the national market. In Southampton, for example, the number of new dwelling permits issued so far this year is just over a third of what it was in 2005. Between January and June 2008, the town handed out 62 permits — down from 88 last year, 130 in 2006, and 175 in 2005.

According to Michael Daly, a broker with RE/MAX Beach Properties who also blogs about Hamptons real estate, a select group of developers and builders (including Michael Davis) have been betting on the Hamptons market for decades — and though they may be adjusting their expectations, they certainly aren’t packing it in. Instead, said Daly, some speculative builders have begun marketing their new homes pre-construction, thereby reducing the, well, speculation.

“More and more builders are putting out their products with sophisticated renderings and floorplans, seeking to gauge the level of interest before they start building,” Daly said.

He estimates that there are about one-third fewer “new construction” homes currently on the market in the Hamptons than there were last year. Of those approximately 135 homes, Daly said that about one-third are being offered “pre-construction.” He said that pool of inventory includes 60 percent of the homes on the market with asking prices above $10 million and 42 percent of the homes currently listed between $2 million and $5 million.

In Bridgehampton, for example, one 6,000-square-foot oceanfront property is listed for $22.9 million “total turnkey,” or alternatively for $15.9 million “as is with plans and permits.” In Quogue, a 9,600-square-foot bayfront property with a wine cellar, gym and tennis court on 4.1 acres is being offered pre-construction for $15.5 million.

“Builders are trying to mitigate a bit of their exposure,” said Daly, who points to 35 homes in the area that have been built but not sold.

Bernard Markstein, senior economist and director of forecasting for the National Association of Home Builders, said “mom-and-pop speculators, the people who got in during the housing boom, have largely shaken out or are licking their wounds trying to figure out what to do with their property. The long-term players, on the other hand, are simply trying not to overextend themselves.”

Custom homebuilder Joe Farrell is one of those long-term players. Farrell, who Daly called “one of the most successful builders in the Hamptons,” said he’s sold eight speculative homes in various stages of pre-construction, at prices ranging from $2.1 million to $18 million, in the last six months.

“One house [is] sitting a little longer than usual, but we ended up renting it for $600,000 for the summer,” Farrell said.

Still, he does admit to being a bit more cautious in the new market. “I’m only buying land if I can get a great deal,” said Farrell.

For his part, Davis said that about one-third of his current business is speculative construction and that the volume of spec homes he’s working on hasn’t changed much in the past year.

“Last year when subprime hit, it sounded as if the real estate market as a whole was going down the tubes,” said Davis. “But I think it’s unfortunate that the press tends to generalize.”

Don Sharkey, the chief building inspector for the town of East Hampton, said building permits overall are “definitely down about 10 percent.” But, he notes, they don’t have data isolating new construction.

Meanwhile, Don Louchheim, the mayor of the Village of Sagaponack, told The Real Deal that the village is currently considering four subdivision proposals, representing about 100 acres total.

The right location, said agents and builders, is key, as are views.
Jeffrey Colle, who has been building and restoring high-end homes in the Hamptons for 30 years, said he is “absolutely as busy” as he was two years ago.

Colle is currently at work on a $40 million spec home in East Hampton, on which he is sparing no expense — from 18th-century fireplaces to bathtubs carved in Italy. The 12,000-square-foot home on Georgica Pond abuts a meadow reserve and will boast an infinity pool, six bedrooms, seven fireplaces and “sunsets that’ll knock your eyes out,” he said.

Colle said he’s already had brokers from Sotheby’s come by, as well as potential buyers from as far away as California and Australia. “I’ve been out here 30 years, and I’ve never seen the top of the market go down,” said Colle.

And that’s good news for other high-end developers like Robert Gianos, who has spent several years preparing to construct a Southampton subdivision that some have dubbed “Billionaire’s Corner.” Nothing like your typical suburban tract home, Gianos’ Olde Towne is reportedly inspired by the look of the village from when it was originally settled in the 1640s. Lots are reportedly priced at between $18 and $22 million.

“He’s building for untouchables,” said Daly, who reasons that since Gianos’ potential buyer won’t care what the price of gas is, the developer needn’t fret over market fluctuations either.

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There’s all sorts of nifty new fact and figures coming out about sub-prime. Here’s a map from Newsday showing the percentage of mortgages for 2006 that were sub-prime loans.

Presumably, that will give an indication as to how many foreclosures might be in these community’s future? Looks like the East End has a much lower overall percentage than our sister markets to the west. see map here

Raise your hands: How many of you REALLY know what MEDIAN price means and CAN EXPLAIN IT!?!? Median is like a Metric figure to me. Like: “What, you want me to walk two kilometers?” or, “WOW! that was a matter of centimeters!!!” Sorry, it’s pretty meaningless to me…for a definition of “median”,try this

Would it make it any better or worse to know that the AVERAGE price of Hamptons Real Estate is now over $1.6 Million? Impressed? Depressed?

“Of the Northeast’s most expensive summer destinations, the village of Water Mill, N.Y., in (Southampton Township), appreciated fastest. The median home price there is $1.38 million; it increased in value at an average of 21% a year over the last five years.” Coming in at #3 on the list was Napeague/Amagansett in East Hampton Township with a median priceof $862,129 and an average appreciation rate since 2002 of 20%.

I don’t care what time of year or how many people are here or how many homes have been built…this is one of the most beautiful places on earth.

Some people just like to bitch and complain. Listen to this one:

“There’s too many cars on the road, too many people who don’t know how to drive, and the feeling here is, ‘Wouldn’t it be lovely to keep some of them away?'” the editor of the East Hampton Star, David Rattray, said in an interview yesterday.

And this:“The traffic is beyond disgusting,” the co-owner of Vered Gallery in East Hampton, Janet Lehr, said. “We see our clients from Southampton to Westhampton and Quogue in the winter, but they just don’t come during the summer months, and I don’t blame them.”